PE RE-RATING ON THE CARDS FOR PSU STOCKS?

Since March 2020 the Nifty has risen by around 160 per cent, while the BSE PSU index is up nearly 190 per cent from the low levels seen at the start of the Covid-19 pandemic

- Deepak Jasani

Till up to 2020, the PSU company: stocks had often underperformed the broader markets. This was due to the poor perception they carried with regard to corporate governance standards, inefficiency in work culture, lack of independence to the management, low pay scales and motivation levels, undue delay in decision making, interference by various branches of the government etc. But all this seems to be changing now. Most importantly, the government is not taking anti minority investor steps like adverse decisions on dividend distribution, cross holdings, product pricing, forced lending etc. This change of mindset is attracting investors towards PSU stocks.